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Steampunk Regulation, Medical Technology, and the IT Revolution

By Robert Graboyes

Regulation as we think of it is an artifice of the 20th century (plus a few years on either end). It’s a hub-and-spoke mechanism, with data conveyed from all over into a centralized machine, processed and analyzed there, and shipped outward, along with some mandates. Our idea of regulation was designed in an era when economically important things fell into one or more of the following buckets: big, heavy, visible, expensive, and traceable.

This is Steampunk Regulation, and we live in its dying days. 2015 health care regulation remains a great 20th century factory of iron and steel and piles of coal and grinding gears and belching smoke. (If the term “steampunk” rings hollow to you, think Jules Verne, Metropolis, Modern Times.)

In health care, this complex began in Washington with the Food and Drug Administration and in the states with professional licensure. It spread broadly through the century. And despite its 2010 timestamp, the Affordable Care Act (ACA) may be remembered as the last gigantic piece of 20th century health care legislation. Lest you think the ACA comment is partisan or ideological, state regulations are as problematic as the ACA, and they are arguably more egregious in states that think of themselves as conservative or free market.

In an era of digital and nanotechnologies and of inexpensive travel, Steampunk Regulation cannot last. The longer we take to realize that, the longer we defer the technological advances that can bring what ought to be the central purpose of health care: to bring better health to more people at lower cost year after year.

Health vs IT

In 2015, health care is still in a world of 20th century regulation. In contrast, information technology entered the 21st century when a bipartisan consensus allowed ARPANET to give birth to the Internet a few decades ago. Around that time, I was Chase Manhattan Bank’s economist for Sub-Saharan Africa. I owned a Kaypro II computer—64 kilobytes, 29 pounds, and $4,400 in 2015 dollars. I regularly lugged it onto the subway because Chase didn’t provide computers to its officers. When traveling in Africa, I could talk perhaps 5 minutes a week to my then-girlfriend (now wife). Other than the BBC’s brief morning report, world news came 3 or 4 days after-the-fact.

Fast forward half a decade, and computers and cell phones were still toys of the affluent. Head onward to 2015, and 95 percent of the world’s population has access to mobile signal. There are 7 billion cellphones on earth. In his magnificent book, The Patient Will See You Now, Dr. Eric Topol notes that this far exceeds the number of toilets or toothbrushes, making cellphones the most pervasive technology in human history.

In February 2015 Cadillac unveiled its new “Dare Greatly” ad campaign featuring five great and unconventional innovators—among them Steve Wozniak and Anne Wojcicki of the genomics and biotechnology company 23andMe. Finally, fast forward to a week ago, when I spent around 20 minutes chatting on Twitter with one of the five innovators in that very Cadillac ad before I even got out of bed or turned on a light. Njeri Rionge is an entrepreneur and venture capitalist in Kenya. Before the Cadillac ad, we had never heard of one another; now, thanks to Twitter, we’ve talked multiple times, shared ideas, and established an ongoing e-friendship. Remarkable.

The Cadillac ad overlays Njeri Rionge’s image with the words, “How dare a hairdresser bring the internet to Africa.” And that one sentence tells the difference between IT and health care over the past few decades. In contrast with information technology, American regulations largely forbid innovators from bringing their unorthodox brilliance and energy to health care.

Not convinced? My recent study, “Fortress and Frontier in American Health Care,” offers the following challenge: Travel back in time to 1990. Explain to people all the changes that have come to health care since then. Your audience will be pleased, but not particularly surprised by anything you say. Tell them about your iPad, Siri, GPS, Skype, Amazon, Kindle, Google, StreetView, Uber, and so forth; if you can even make them understand this technology, they will think you are either delusional or lying.

Unlike health care, IT took expensive things and impossible ideas and—in a few decades—brought them to the humblest villages on earth. IT achieved universal coverage while health care continued shoveling coal into the blast furnace.

Fortress and Frontier

The real divide in health care isn’t between the ideologies of the Left and Right. It’s between worldviews I call the Fortress and the Frontier. In the Fortress, public policy has two overarching purposes: (1) to imagine every terrible thing that could possibly happen and prevent all of those things, and (2) to protect insiders from outside competition—and “insiders” includes doctors, hospitals, drug and device companies, and insurers. In contrast, the Frontier understands that for innovation to occur, consumers and producers have to be free to take measured risks, and outsiders in garages must be free to challenge insiders in skyscrapers.

But, you might think, information technology and health care aren’t comparable. Health care is life and death, pain and suffering. Information is just emails and Candy Crush. Think again. A prophet in 1990 could have bellowed that the web and cell phones would bring fraud, predators, identity theft, cyberbullying, crime, and terrorism.

The prophet would have been correct. But we deal with the threats as they come, accept the negatives as they occur, and enjoy the enormous benefits of an interconnected world.

Change is coming

But how do we bring about change? The American economist and Nobel laureate Milton Friedman and others were deeply critical of the FDA, the American Medical Association, and other 20th century factories of health care. But re-litigating the 20th century institutions is not a fruitful effort.

At a recent event that I attended, someone said the FDA as we know it is necessary because, otherwise, charlatans would dispense radium-based snake oil. That’s a perfect example: In 1918, if someone offered you bottle of radium water called Radiothor—advertised as “A Cure for the Living Dead”—you would have found it difficult to determine its safety, aside from navigating the FDA’s information hub-and-spoke. This is a perfectly credible argument for the 20th century FDA. But today, we’re awash in data. In two seconds, a Google search will tell you that Radiothor gives you cancer and makes your jaw fall off.

The nature of medical technology is shifting radically. It’s one thing to regulate a six-ton, $1 million MRI machine. It’s another thing for the FDA to try to evaluate and control the flow of medical apps, home genomics kits, 3D printing, nanotechnology, wearables, and downloadables. Small, inexpensive, powerful medical technologies spread peer-to-peer and will not be amenable to 20th century-style control.

And even if they were, consider the existence of Dr. Devi Shetty, a great Indian cardiologist and innovator. His hospitals do heart surgery at a fraction of what they would cost in the United States or Europe, and the success rates are often better. His health system just constructed a new hospital in the Cayman Islands—easily within reach of American patients.

23andMe is an American product, and largely banned by the FDA, but you can buy it in the United Kingdom. And if you really want it, you can hop a cheap flight and get it. (Happily, the FDA has only recently opened the door to 23andMe just a bit.)

New homebuilt medical devices can monitor your child’s blood-sugar levels and give you a remote reading. They can take EKGs and diagnose a heart attack. Two Ugandans just developed an app to detect fetal cardiac stress. Two Jordanians reconfigured their shoe-sizing app to help fit victims of war with prosthetic limbs.

When a physician in India, Costa Rica, or Singapore can administer a medical exam through your iPad and email the software to 3D-printing device or pharmaceutical, the FDA and other Steampunk regulatory agencies will not, cannot, maintain their grip.

We can decide now how to exit the Fortress and enter the Frontier. Or we can replicate the experience of the steel industry in the 1940s and 1950s—build a high wall, watch it crumble, and then rust away.

Robert Graboyes is a senior research fellow with the Mercatus Center at George Mason University, teaches at the medical centers at Virginia Commonwealth University and the University of Virginia, and is author of “Fortress and Frontier in American Health Care.” He produces a twice-a-month health care policy newsletter and received the Reason Foundation’s 2014 Bastiat Prize for Journalism. Follow him on Twitter @Robert_Graboyes.

Editor’s note: This article was adapted from a talk he gave at the Progressive Policy Institute on March 2, 2015.

Robert Graboyes
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